Improving Customs Transit Systems
In the Islamic Countries
17
countries and on average, they add an additional 87% to the restrictiveness imposed by tariffs9.
According to this study, in some of the countries, the restrictiveness of non-tariff barriers is
larger than the restrictiveness of tariffs barriers. Looking at these different costs inside the
supply chain, we can see that a significant part of the whole trade costs results from the policy.
The term total logistics costs as a sum of transport costs or fees paid for actual transit
transportation services to truckers or rail operators, other logistics costs including transit
overheads such as fees, procedures, and facilitation payments, and delay costs as delays in
transit moving, inventory costs and induced costs to hedge unreliability inventory and
warehousing costs, or shift to faster more expensive mode of transportation10.
It is logical to conclude that efficient CTR procedures which will allow the means of transport
and goods to pass as smoothly as possible are crucial for the supply chain network.
1.5 CTR International Legal Framework
The main objective of the International Legal Framework regarding CTR is to provide legal
ground to facilitate the movement of goods and means of transport through a customs territory,
without payment of duty and taxes in the Customs Office of Departure (CoDe) and Customs
Office of Transit (CoT). The national customs code and the bilateral/multilateral agreement
must be in line with the International Legal Framework standards and recommendations . In
recent years many initiatives have been taken to raise the issue and cooperation on a global
level. In numerous countries and regions, the national transit legislation has evolved into
harmonizing and regionally integrated transit regimes.
International organizations are focused on harmonization and rationalization of the transit
procedure, exchange of information (including dataset elements) that will assist governments
and CAs in the development of an effective transit mechanism that supports effective customs
control, facilitate legitimate trade and the movement of goods and thus meets the requirements
of both CAs and traders.
Through the years, the transit legislation, standards, and recommendations which recognize the
significance of CTR have been codified by a number of international conventions. Two
multilateral agreements, the WCO Revised Kyoto Convention (RKS) and the WTO Trade
Facilitation Agreement (TFA) constitute an international framework for trade facilitation and
the harmonization and simplification of customs procedures. These agreements complement
older legal instruments such as the UNECE Convention of Harmonization of Frontier Controls
9 Looi Kee, H., Nicita, A., & Olarreaga, M. (2009). Estimating Trade Restrictiveness Indices. The Economic Journal,
119(534),172-199.
10 Jean-Francois Arvis, Jean-Francois Marteau, Gael Raballand. The Cost of Being Landlocked: Logistics Costs and Supply
Chain Reliability, The World Bank, 2010